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Capital pfm people and processes (Achilleas Mavrellis)

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The DEFRA capital prioritisation approach.

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Capital pfm people and processes (Achilleas Mavrellis)

  1. 1. Capital Optimisation– people and processesAchilleas MavrellisPerformance, Panel and Portfolio Management Lead, Defra
  2. 2. Defra deals with some major global challenges with far-reachingconsequences3Impacton the interlinked systems of natural resources, food, and climate changeNatural resources Climate ChangeFood• Many are undervalued or notvalued at all• Competing pressures on use (e.g.land used for food, housing,biodiversity)• Demand increasing (e.g. 70-90%increase in water demand by 2050)• Used wastefully (e.g. businessescould save £6.4bn a year throughefficient use)• UK food supply is part of a globalsystem• Food production needs to increase(40% globally by 2030) in anenvironmentally sustainable way• Agriculture impacts on naturalresources (e.g. 70% of water use isfor agriculture)• Fisheries need managing (50% are atcapacity; 25% are over exploited)• Impacts on farming, food supply andnatural resources• Building a society and economyresilient to climate change (e.g.increased flood protection)• Carbon sinks under threat and needmanaging (e.g. forests, marineenvironment, soils)• Key sectors need to reduce carbonemissions (e.g. farming, waste)Economic growth(3-6 fold increase inglobal GDP by 2050)Increasing population(9 bn by 2050)Climate change(currently on track for a3°C rise)Global driversAnd these will have to be tackled with significantly less money
  3. 3. Capital Prioritisation Approach Priority 1 (‘Irreducible core’) cases normally approved (subject to affordability) ifthere is clear evidence of vfm as well as at least one of:risk of breach of statutory legislation; significant Health & Safety issues; impactson business continuity; building new business opportunities; contributing to invest-to-save Priority 2 (‘discretionary’) cases approved (subject to affordability):prioritised on clear evidence of vfmoccasionally requiring further assurance or contract confirmation Reserve pots are held for speedy response to issues Strategic goal: minimize under spend while maximising delivery of benefitsDefra in-year Capital Prioritization
  4. 4. FinPanExisting AllocationsSROs & CEOs of Network BodiesHoP/F6 weekly review ofoverall position / in-yearreallocationsCarry outPrioritisation withinseparate envelopes:Estates, IT, ScientificEquipment andChallengeAnnual initialbudget allocations,quarterly review,cross-cutting casesLegend:FinPan – Finance PanelNetwork Bodies – all Agencies, NDPBs and otherDelivery Bodies;HoP/F – Heads of Profession/Function Capital PanelCapital Processes SummaryNew BidsMI Capital Projectreporting on Oracle,and via Network BodyMI PacksHeads of Profession forEstatesITScientific Equipment:ChallengeCapital Assurance (PPM, NADB,Estates, Equipment, ad hoc)
  5. 5. Approach to Capital portfolio optimisation forthe next Spending Review (15/16 onwards)Commission business cases and evidence statements across the NetworkNegotiate sub-portfolio status with HMT as scope becomes apparentEngage economist review and policy teams – gauge ministerial commitmentScrutinize and push back – iterative cycleRank according to NPV / G = Net Present Value / unit cost to governmentas well as by 0-1 score for { }Negotiate with HM Treasury!legislative driver,contractual commitment,political imperative
  6. 6. Key people delivering Capital PfM• The SROs must be behind you – and at least one keymember of their PMOs to support them• Finance Manager(s) – just don’t call it PfM• Influential Directors with a commercial / financial remit• Project managers in charge of delivery – they understand thereal problems on the ground• Economists – they can quantify the benefits and actindependently

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